Australia has been intensifying efforts to develop its critical minerals sector, aiming to become a leading producer and processor of key minerals needed for the global green transition. The government’s commitment includes launching a national strategy, providing billions in funding, and recently implementing tax incentives to attract further investment into the sector.
The global demand for critical minerals, including those used in batteries, electronics, microchips, and solar energy, is expected to surge in the coming decades. Australia is well-positioned to meet this demand, housing some of the world’s largest recoverable deposits of critical minerals such as cobalt, lithium, manganese, rare earth elements, tungsten, and vanadium.
In December 2023, the Australian government introduced the Critical Minerals Strategy 2023–2030, aiming to expand mineral production, processing, and supply chains. The strategy is designed to foster job creation, economic growth, and collaboration among communities, industries, investors, research sectors, states, and international partners. It focuses on six areas: developing strategic projects, attracting investment, engaging with First Nations, positioning Australia as a global leader in ESG (environmental, social, and governance) performance, investing in infrastructure, and building a skilled workforce.
In 2021, the government set up the Critical Minerals Facility with $1.3 billion in funding to fill financing gaps in the sector, and later added another $1.3 billion. The facility supports projects aligned with the government’s strategy, aiming to strengthen Australia’s critical minerals sector.
Earlier this year, Australian lawmakers passed new legislation to provide tax incentives for critical minerals production and renewable hydrogen projects. The law offers $4.4 billion in tax breaks, including a 10% deduction on refining and processing costs for 31 critical minerals from 2028 to 2040. Resources Minister Madeleine King emphasized that processing these minerals domestically would create jobs and diversify global supply chains.
The Australian Labor government, led by Prime Minister Anthony Albanese, faces political opposition from the Liberal-National Coalition, which is challenging for power in the upcoming May election. The Coalition’s energy policy is significantly different, with plans to elevate natural gas to the same status as critical minerals, making it eligible for $3.6 billion in export finance. Queensland Senator Susan McDonald confirmed that a Coalition government would ensure natural gas remains a key part of the Australian economy, providing funding for gas projects under the $4 billion critical minerals facility.
The Coalition also plans to introduce an east coast gas reservation scheme to address rising energy prices. Meanwhile, Prime Minister Albanese’s focus remains on accelerating the transition away from fossil fuels, particularly oil, gas, and coal, while boosting the mining and processing of critical minerals to strengthen Australia’s trade ties with the U.S. This move is seen as part of broader efforts to reduce dependency on China for critical minerals and green energy components.
In the context of recent trade tensions, including U.S. President Donald Trump’s tariffs on steel, aluminum, and many Australian goods, Albanese sees expanding the critical minerals sector as a way to secure Australia’s future in global trade. The government’s strategy positions the country as a central hub for critical minerals production and processing.
The future of Australia’s critical minerals industry may hinge on the outcome of the May election. If Labor retains power, it is expected to continue its push for renewable energy and critical minerals. However, if the Liberal-National Coalition wins, greater emphasis could be placed on natural gas, shaping the country’s energy landscape for years to come.
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